China and Canada, Freedom Foes or Trade Friends

[Derek 2.0]

No its ok to have trade imbalances with specific entities as long as you have surpluses with others. Im not even vaguely suggesting that people should make all of their own stuff.

And how does Canada currently stand?

[eyeball]

Probably nothing. But that wasn't the argument I was making.

Democratically derived fresher air in China would cost us a fortune in higher prices - these would reflect the cost to China of rebuilding their industrial infrastructure to meet the higher standards that air quality legislation would require.

Goods are mostly cheaper in China because the government allows manufacturers to treat people and the environment they live in like crap. It's hard to see how you are are not making an argument for maintaining the status quo in China.

[dre]

No

You're only looking at one trade relation.

No I gave you statistics on our current account deficit which takes all trade into account.

Cheap good are produced in China, because they are cheap. The cost of producing in Canada would exceed the cost of producing china. Not only because of the cheaper labor but also because of the economies of scale that exist in china and the start up costs. It would be of no benefit because we'd be still competing against chinese goods and we being paying more for domestic production.

Like I said we have no idea how cheap they are. The Nmibi is undervalued an estimated 30%, and the Canadian dollar is overvalued by an estimated ten %. That means that chinese imports appear to be 40% cheaper than they really are. And as I said, you also have to take into account our current accounts deficit which is about 45 billion per year.

What that shows us is that we are leaking capital to foreign countries to the tune of about 3% of GDP. That capital leaves our economy which results in 3% less economic growth, and since its not possible to run a current accounts defecit without a matching inflow of capital we are either borrowing that money into our economy or selling assets.

This is forcing us to grow our economy with debt. The central bank is making up for that net loss of capital by slashing interest rates to near historic lows and dumping all kinds of debt into the system in order to keep consumption strong.

So have Canadians really gotten the benefit of cheap goods during the last couple of decades of trade liberalization? Thats hard to say... Yes we have lots of "stuff". But we dont have it because it was "cheap" we have it because we totally depleted our savings to get it, and we still havent paid for all of yet.

Edited October 2, 2014 by dre

[dre]

And how does Canada currently stand?

Youre only looking at one factor. You are ignoring net factor income. The fact is that our financial relationship with foreign countries is resulting in a net flight of capital from our economy to the tune of 40-50 billion dollars per year.

[Derek 2.0]

Youre only looking at one factor. You are ignoring net factor income. The fact is that our financial relationship with foreign countries is resulting in a net flight of capital from our economy to the tune of 40-50 billion dollars per year.

Where does Canada stand in that regard?

[dre]

Compared to

Where does Canada stand in that regard?

Compared to other countries you mean?

We are -3.23 percent of GDP. A fair bit worse off than the US for example at -2.16, but not as bad as the UK at -3.73.

[Smallc]

And yet we have one of the fastest growing economies (nominally) in the western world.

[Derek 2.0]

Compared to

Compared to other countries you mean?

We are -3.23 percent of GDP. A fair bit worse off than the US for example at -2.16, but not as bad as the UK at -3.73.

So again, based on our current economy, how is that a bad thing? I'm not meaning to sound combative, I'm generally interested in this topic, perhaps we should start a new thread?

[dre]

Cheap good are produced in China, because they are cheap. The cost of producing in Canada would exceed the cost of producing china. Not only because of the cheaper labor but also because of the economies of scale that exist in china and the start up costs. It would be of no benefit because we'd be still competing against chinese goods and we being paying more for domestic production.

One more point on this... Goods from china dont just have to be produced for less, they have to be produced for MASSIVELY less. In many cases the raw materials need to be shipped from here to China, then trucked to factories, then manufactered, then shipped/trucked all the way back here to a retailer.

The reality is that if we did not have a contrived currency imbalance, manufacturing goods in China would ALREADY be dubious position. China knows this which is why they have been manipulating currency values in the first place.

At the end of the day all of this production is going to come back, and it already would be if the Chinese played fair.

[WWWTT]

Well then lets hope Beijing cracks down sooner than later. The last thing we need is a China where people start living in expectation of more freedom and the benefits of democracy. The next thing you'll know they'll want clean air to breath and how much will that cost our economy?

LOL!

The people of China have more freedom than you do in Canada!

WHY would the Chinese want less freedom under a western style democracy?

WWWTT

[WWWTT]

Yes they say well over 100k. Cameras have caught boxes of rubber bullets and CS gas being unloaded into the local police stations just recently. Let's hope they don't go down that road.

If this was a protest in the US, there would be already ten different threads about it on MLW and a body count.

WWWTT

[WWWTT]

Democratically derived fresher air in China would cost us a fortune in higher prices - these would reflect the cost to China of rebuilding their industrial infrastructure to meet the higher standards that air quality legislation would require.

Goods are mostly cheaper in China because the government allows manufacturers to treat people and the environment they live in like crap. It's hard to see how you are are not making an argument for maintaining the status quo in China.

Link please!

I'm interested in reading that information you read to come to this conclusion.

WWWTT

[On Guard for Thee]

If this was a protest in the US, there would be already ten different threads about it on MLW and a body count.

WWWTT

Luckily in the US people already have the rights the HK people are now attempting to obtain from Beijing.

[cybercoma]

LOL!

The people of China have more freedom than you do in Canada!

WHY would the Chinese want less freedom under a western style democracy?

WWWTT

I guess if you don't consider the extensive use of the death penalty for non-violent crimes, the enforced disappearances, the forced evictions, the criminalization of Facebook, the licenses required to publish anything about the government, and the violent oppression of religious minorities like Falun Gong and Tibetan monks, then sure. China is wonderful this time of year.

[dre]

So again, based on our current economy, how is that a bad thing? I'm not meaning to sound combative, I'm generally interested in this topic, perhaps we should start a new thread?

You arent coming across as combative at all.

The bad thing about the flight of capital is that it forces us to displace that lost capital by either borrowing or selling assets. The bad thing about building a domestic economy around debt financed consumption is that its a bubble of sorts, and you run the real risk of encountering serious recessions. Trade liberalization played a large part in the 2007 recession for example.

Overall though Im not all "Gloom and Doom" about the Canadian economy. Im just pointing out that a lot of people just seem to have this almost religious belief that "trade is good", but the reality is to evaluate the impact of our dealing with China or any other country is a complicated thing to do, and at best I think you could say its a "mixed bag".

[WWWTT]

Luckily in the US people already have the rights the HK people are now attempting to obtain from Beijing.

If you're wealthy, not if you're poor and African American

Also there is more people in jail per capita in the US so what you are saying is factually false.

WWWTT

[PIK]

I guess if you don't consider the extensive use of the death penalty for non-violent crimes, the enforced disappearances, the forced evictions, the criminalization of Facebook, the licenses required to publish anything about the government, and the violent oppression of religious minorities like Falun Gong and Tibetan monks, then sure. China is wonderful this time of year.

Don't forget the selling of organs taken from the executed prisoners.

[The_Squid]

Ya and in China, they give a rats ass if we become more communist.

I guess it's just westerners that want to change everybody.

But after 50 or so years and the Chinese economy quadrouples the western's combined, we'll be adopting more communism!

WWWTT

Don't you think it's true that the Chinese commies economic growth has been because they are adopting more western style of capitalism?

Or do you really think that communism is why they are doing better economically?

[Demosthenes26]

One more point on this... Goods from china dont just have to be produced for less, they have to be produced for MASSIVELY less. In many cases the raw materials need to be shipped from here to China, then trucked to factories, then manufactered, then shipped/trucked all the way back here to a retailer.

The reality is that if we did not have a contrived currency imbalance, manufacturing goods in China would ALREADY be dubious position. China knows this which is why they have been manipulating currency values in the first place.

At the end of the day all of this production is going to come back, and it already would be if the Chinese played fair.

If production is moving anywhere its going to a different third world country. You can already see this with textiles, where they're now being made in countries like vietnam, bangeledesh. The botton line is production is done where its most cost effective. Canada lack the labor rates, supply chains and the infastructure for the products that the chinese produce. Again to moves those over here would cost more than the cost of importing.

We're not in a position to be able to make the Chinese do anything.

[WWWTT]

I guess if you don't consider the extensive use of the death penalty for non-violent crimes, the enforced disappearances, the forced evictions, the criminalization of Facebook, the licenses required to publish anything about the government, and the violent oppression of religious minorities like Falun Gong and Tibetan monks, then sure. China is wonderful this time of year.

Going to have to answer each point separately.

First off, their justice system is very blind. Doesn't matter if your are a police officer or a wealthy person or a politician. All receive the same treatment.

I consider that very fair and a high standard reflecting court consideration of ones rights. Another way of saying this is that no one has more rights as we see in western courts.

True their punishments for crimes is harsh, but at least it's across the board. As well, China is mitigating to lessen the punishments. Opposite of what we see in North America.

Everytime I have been in China, I have clearly seen people of various faith free to practice their faith, many are even openly members of congress in the communist party. What you don't see is tax credits for religions/churches etc. What you don't see, is religious people trying to solicit people to join their faith! What you don't see is religions trying to get political.

I personally know several members of the communist party of China (CPC) and from what I hear, we should be protesting here in the streets to adopt a similar system unique to Canada!

WWWTT

[WWWTT]

Don't forget the selling of organs taken from the executed prisoners.

Really?

Lots of similar money recovering laws from criminals in the west.

I guess you feel China's criminals are entitled to more rights than what western criminals are entitled to.

Double standard!

WWWTT

[On Guard for Thee]

If you're wealthy, not if you're poor and African American

Also there is more people in jail per capita in the US so what you are saying is factually false.

WWWTT

You do know that black people are allowed to vote in the US?

[hitops]

Countering trade barriers with other trade barriers may or may not be the way to go but trying to gain dominance in a particular market by keeping foreign products out is a well used tactic. You can't ask your business to adapt to a continually moving target that is expressly designed to keep them out.

I agree that everyone is not supposed to build everything, indeed there are few countries that are capable of doing so.. However, governments do have the right and indeed the duty to protect their country's business' from the predatory practices of others.

I'm not saying that same industry adapt, I'm saying the economy as a whole will adapt. This means that some industry might suffer, and other industries might do better.

It is not the government's role to protect a business or business sector, nor is there any prosperous or major country on earth who's constitution confers that responsibility on government. Picking winners and losers, or ensuring continued winners is absolutely not the role of government, and only results in net loss for the country as a whole.

Free private enterprise is a risk, freedom to fail is a risk. It should remain so. There is no reason you and me taxpayer should be forced to be in any way involved in salvaging anybody else's failing business, no matter the reason it is failing. Because once we do, that opens the floodgates for anyone to get bailout out or be protected. Then we just lose flexibility in the system, become less nimble, less adaptable, and lose competitiveness overall.

If a business a Canada does poorly because China gets subsidies through currency manipulation, other businesses in Canada, at the same time, do better due to access to lower cost of goods from China for their business. The economy then adapts by shifting towards doing things that are helped by lower cost of materials or goods from China. We don't simply lose out in one sector, we also gain. Obviously both Canada AND China would gain even more if China removed barriers, but in the reality that they don't, imposing our own only makes the problem worse.

Edited October 2, 2014 by hitops

[WWWTT]

Don't you think it's true that the Chinese commies economic growth has been because they are adopting more western style of capitalism?

Or do you really think that communism is why they are doing better economically?

Western style capitalism? Where corporations are allowed to rape consumers?

No sorry I have a different opinion from what I have seen there.

China is a socialist country where corporations are not allowed to charge whatever price.

It could be because competition there is greater, but I believe the government uses a heavy hand (for TV, phone, internet, banking) when setting charges and fees.

WWWTT

[WWWTT]

You do know that black people are allowed to vote in the US?

Yes for brand X or Brand Y.

But I'll just use the fact that more people in jail=less rights.

Did you know that people in China are free to join the communist party where they can vote on policy?

I guess you feel that not being allowed to vote on government policy= more freedom?

WWWTT